The Hamilton Ave Journal 09.16.10: Volume 2 – Issue 155

THE HAMILTON AVE JOURNAL
By JP Prag

Volume 2 – Issue 155

ABOUT THE JOURNAL

The Hamilton Ave Journal is the only wrestling news report focused solely on the business of wrestling. Here in the Journal we not only look at the stories that are important to the investor and business-minded person, but also delve deeper into stories that most fans of wrestling would overlook. That is because the Journal is about getting the heart of the matters that affect the companies and outlooks of the wrestling world.

And where is Hamilton Ave? That is the location of the WWE Production Studio in Stamford, CT, and thus the most powerful place in the wrestling world. Besides, The East Main Street Journal just does not have the right ring to it.

Who am I? I am JP Prag: consultant, entrepreneur, businessman, journalist, and wrestling fan.

Now, ring the bell because the market is open.

The Journal’s front page area known as What’s News isn’t just about telling you what has happened. The stories in this section are about what will have an effect on the wrestling industry, individual federations, and the wallets of the fans.

TOP STORY: Lawsuits a-go-go

Last week, the Journal reported that Democratic stalwart and Yale Law Professor Robert Solomon was questioning how the WWE can classify the people who work there as “independent contractors” instead of employees. As Linda McMahon is running for Senate, she has earned the ire of much of the political kingdom. Before it was infighting with the Republicans, but now that she has their nomination the Democrats have set site. As such, Mr. Solomon urged his fellow Democrats and those already in positions of power to begin an investigation into the WWE for their classification of workers. Most likely he would not have noticed the WWE, but with Linda McMahon in full view and gaining in the polls, he is looking to help out his party by disparaging the company the Linda helped build.

And that urging has paid off as the State of Connecticut has been doing an audit of the WWE for just such a possible misclassification. When asked how the audit came about, Labor Department spokesperson Paul Oates told the Connecticut Post:

“It can be a complaint. It might be through a random audit or somebody filing for unemployment benefits.”

The state of Connecticut conducted 1,979 such inquiries in 2009 alone, so the WWE is not alone in this recent backlash. Connecticut has become extremely strict in their enforcement of the term “independent contractor” as the Connecticut Post explains:

In May, Republican Gov. M. Jodi Rell signed legislation that increases fines for misuse of independent contractors from $300 per incident to $300 a day beginning Oct. 1. It is now potentially a felony.

Still, the WWE has never fallen under this scrutiny before, at least from a government probe perspective. They have twice been sued for the issue and one both times (the first with a settlement and the second due to technicalities). But WWE spokesperson Robert Zimmerman wanted to highlight where the WWE stands:

“WWE has always complied with the law. Up until this election, WWE has not been fined or investigated in the past for independent contractor classification. However, curiously the state of Connecticut is currently conducting an audit of WWE’s classification of independent contractors. WWE constantly reviews its internal practices and procedures to comply with ever-changing employee laws.”

Former CEO Linda McMahon was unaware the probe was going on until recently. As far as her history with the workers she stated:

“As far as I know, all of the classifications have been correct or if not they were brought to WWE’s attention… Any kind of audit, a tax audit or whatever … if you made a mistake, you change it, or if it’s fine, you leave it.”

Either way, with the state involved this could become the defining issue for the WWE in 2010.

Meanwhile, this is not the only issue going on as the WWE has become involved in an odd, international triangle court case.

The WWE signed an international licensing agreement with J.F. Ramos out of Portugal. The company had the right to create WWE branded merchandise at the agreement of the WWE and distribute it around Europe. However, the WWE alleges that the company moved merchandise that the WWE did not give approval for and forged paperwork to hide other lost merchandise.

How they came to this conclusion is because J.F. Ramos sold their merchandise to French retailer Sun City, Inc. The WWE realized there may be issues with the merchandise and sent a cease and desist order to Sun City to stop selling the alleged counterfeit merchandise. Sun City then went back to J.F. Ramos to prove what they bought was approved, and J.F. Ramos was able to produce paperwork that appeared legitimate to Sun City. The WWE, on the other hand, said this is the paperwork that was forged.

Sun City felt the merchandise they were receiving from J.F. Ramos was not counterfeit and therefore decided to sue the WWE in French courts for €17 million, or about US $21.6 million. The WWE stands by their claim is suing J.F. Ramos for the alleged counterfeiting, forging, and the cost of the French case with Sun City.

It is a confusing triage to say the least and will most likely be tied up in several courts for year. Even still, it is another open item for the WWE legal team to be worrying about in the years to come.

Trouble in the UK

TNA’s largest international market the United Kingdom has just given the company quite a scare. As reported in Issue #141 on June 10, 2010, the deal by BSkyB to purchase what was formerly known as Virgin Media Television went through this past week, so now Sky owns Bravo which is the station that TNA airs on. This was originally a concern because Sky Sports also airs the WWE, which made one wonder if there would be a conflict in the programming as the WWE would have more clout. Written then in the Journal:

Sky may have a contract like that, but they most likely have a clause that says if they acquire a new network they must honor their contracts. Much like Spike in America, Bravo cannot just cancel a contract with TNA. They have an obligation to pay TNA and air their programming.

Additionally, the acquisition has not happened yet. This still has to pass regulatory hurdles which puts the deals a bit off. And as V noted in the comments section, the WWE does not have a lot of weight on Sky compared to other premium programming. Football brings in the vast amount of revenue for Sky, so Sky would more than likely let the channels run themselves for the time being. When the contracts are up, TNA might have an issue, but for now Sky really does not have a station like Bravo in their portfolio so they will more than likely keep them around for the time being.

Apparently, this was in error as Sky has specifically stated they already have a station like Bravo in Sky1 and are going to shut down the network. While there is a great deal of differences between the channels, Sky does not apparently see enough of them to warrant the existence of both.

TNA Executive Vice President of Licensing and International Television Distribution Andy Barton was quick to put out a statement:

“Following the acquisition of Virgin Media TV channels (now rebranded as The Living TV Group) by Sky, there has always been the possibility of fundamental changes to those channels, including Bravo. However, we remain confident in TNA’s position due to the outstanding ratings enjoyed in 2010, and our long term contract with the Living TV Group.”

In other words, TNA has been doing well enough in the ratings that they feel their programming will just be shifted to another one of Sky’s stations. Again, one of those being premium station Sky Sports does not look like a possibility because of the WWE’s programming, but there are other options.

At that, TNA does air Xplosion and PPVs still on The Extreme Sports Channel as well as a delayed version of iMPACT on BT Vision. Should Sky chose not to pick up the programming and just pay out the contract, there are other potential destinations where TNA already airs.

Meanwhile, the shutdown is not happening immediately so there is time to prepare and work out the options. The purchase itself took nearly four months from the time it became public, so a move like this will take a while to execute.

Newsbites

Some items of note in the rest of the wrestling business world:

The WWE has made an amendment to their Wellness policy by outright banning the drug Carisprodol, which is general known as Somas. Unlike many other drugs, even a prescription will not allow a WWE performer to use the substance. Somas are a muscle relaxer, but have led to wrestlers passing out in public and overdose deaths, like that of Louie Spicolli.

WWE and TNA will once again go head-to-head, although this time it is just for the audience in Orlando. On November 22, 2010 RAW will emanate from the Amway Center while TNA will be taping iMPACT at Universal Studios. The two have had shows close to each other in the past and there does not seem to be an effect on either audience.

Down in Mexico, the WWE continues to dominate the rating war as SmackDown pulled an 8.6 rating compared to AAA’s 3.4 and CMLL’s 2.2. TNA’s ratings were not readily available, but the WWE has done a tremendous job capturing this market. See the Editorial below for an additional discussion about this rating point.

In their latest press release concerning the October 7, 2010 live TNA iMPACT, the article stated:

Since its founding in 2002, Total Nonstop Action (TNA) Wrestling has become the world’s fastest-growing professional wrestling company, currently airing in over 120 countries worldwide.

That 120 countries number would be a 20 country jump from what was released just last week and still not in line with the 70 listed on the website plus Al Jeezera. The Journal contracted TNA Public Relations Manager Chris Thomas for a clarification, but Mr. Thomas did not immediately respond to the request.

In the Marketplace we look at the trends in television ratings. This section is less for critical analysis by the Journal but more for the reader to see what is really going on and to draw their own conclusions.

As with stocks, here in the Journal we track the progress of television ratings. If ratings are the barometer by which we judge the product, then over the course of time we should be able to see patterns, trends, and anomalies.

For the week ending Wednesday September 15, 2010, here are the current standings of the shows:

Analysis:

RAW is already feeling the effect the Monday Night Football as the show has dive-bombed down to a 3.0 for the past two weeks. RAW’s competition, on the other hand, scored a 10.87 rating for the Ravens / Jets game and a 8.82 for the Chargers / Chiefs. Although RAW took a similar percentage dip to last year, on those weeks RAW was getting a 3.4 rating. So while RAW is down 10% from a few weeks ago, they are down an additional 10% from last year. This does not bode well for RAW’s chances against MNF for the upcoming 15 weeks. Jeff Small did a fair prediction of RAW’s ratings against MNF, so be sure to check that out.

Meanwhile, Spike TV pre-empted iMPACT in order to not have the show compete against the NFL opening game. It looks to have been a prudent move as the game scored a 17.7 rating, the highest rating in 13 years for a regular-season prime-time game. iMPACT’s replacement Gangland did a 0.52 rating, which would be just slightly below the Spike average rating of a 0.6 and well below the 1.0 iMPACT has been averaging recently.

We all know that wrestling is a business, but we don’t often pay attention to what sells and makes money. Money and Investing looks into the top selling items in the world of wrestling and any interesting figures that may have come out this week.

What are the top selling items for the WWE? WWEShopZone.com releases a list of varying numbers to show what is selling for them:

1. John Cena Cenation T-Shirt ($25.00)
2. Randy Orton Lobotomy TOP ROPE T-Shirt ($45, on sale $37.95)
3. John Cena Cenation WWE Bandz ($5.00)
4. John Cena Cenation Baseball Cap ($20.00)
5. John Cena Cenation Sweatband Set ($12.00)
6. The Miz My Name Is T-Shirt ($25.00)
7. John Cena Cenation YOUTH T-Shirt ($22.00)
8. John Cena 2010 YOUTH Halloween Package ($36.99)
9. D Generation X Army Strong T-Shirt ($25, on sale $19.95, on double sale $6.25)
10. WWE Slam Attax Trading Cards ($3, on sale $2.10)
11. John Cena Never Give up Notebook ($5.99, on sale $2.40)
12. WWE Superstars Bandz (Randy Orton/Rey Mysterio/Edge) ($5.00)
13. Bret Hart Sunglasses ($12, on sale $3.96)
14. Nexus Logo T-Shirt ($25, on sale $19.95)
15. Miz I’m Awesome T-Shirt ($25, on sale $19.95, on double sale $12.50)
16. WWE Red/Blue Reusable Bag ($3.99)
17. Bret Hart Best Since 1984 T-Shirt ($25, on sale $19.95, on double sale $6.25)
18. WWE 2010 Trading Cards ($2.99)
19. John Cena Never Give Up T-Shirt ($25, on sale $19.95)
20. WWE Stamp and Color Set ($8.99, on sale $3.60)

The John Cena / Randy Orton / Miz / Nexus domination continues, but so do the sales. This week brought in a plethora of small and sale priced items, mostly from the trading card collection. Between those, the bandz, notebooks, and the Stamp and Color Set the WWE is definitely showing their skew towards the younger audience.

TNA sometimes releases a list of top selling items on ShopTNA.com. According to the site the top selling items were:

1. Don’s Insane Brown Bag Special ($20)
2. Jeff Hardy “The Ring Is My Canvas” T-shirt ($19.99)
3. Mr. Anderson………People Are Fake T-Shirt ($19.99)
4. Jeff Hardy Enigma T-Shirt (Glow In The Dark) ($19.99)
5. TNA Knockouts Special ($29.99)
6. Kurt Angle “Warrior” T-shirt ($19.99)
7. Jeff Jarrett Autographed Bound For Glory Poster ($19.99)
8. Mr. Anderson “Donkey” T-shirt ($19.99)
9. RVD – Video Wall T-shirt ($19.99)
10. Slammiversary – 2010 ($19.99, on sale $14.99)

For the first time in ten weeks, TNA has decided to update their top selling list. Although the Journal would be tempted to hold off this review until next week (since the item will not change), let’s take a look through the top sellers.

Mr. Anderson and Jeff Hardy continued their domination with each holding two items. For those wondering why they are on the top of TNA’s card, here is the reason right here. Even RVD who has not been on television in weeks still managed to come in at number nine on the list. Kurt Angle also made a showing at number six and Jeff Jarrett’s autographed poster of Bound for Glory came in just below that. With no sign of any of the TNA Originals or Frontline, the newcomers appear to be holding up their end of the bargain.

Wrestling isn’t just about watching and reading. The best way to be a wrestling fan is to experience it live. Where is wrestling coming to in the upcoming weeks? The Personal Journal answers that question.

Do you know a wrestling event coming up? Send one in to The Hamilton Ave Journal and we’ll be sure to add it to the list.

The Editorials section is designed for you, the readers, to respond to the views presented in the Journal, send an important news item, or talk about another overlooked business related item in wrestling. Just beware: the Journal reserves the right to respond back. Now, let’s break down the topics from last week’s commentary section:

Linda McMahon

Can the Linda coverage calm down? I know it is politics and every little thing matters, but really? Another 2-3 months of ‘nothing’?
– Quentin

I think people just need to back off Linda. Let her run her campaign with some dignity for once. She’s been bullied quite enough, I think.
– Guest#4876

Apparently you both missed the point of last week’s coverage. This was not about Linda McMahon in anyway, but that her opponents in the Democratic party might open up a case against the WWE for “independent contractor” status of those who work for the WWE. And just a week later the Journal has been proven right.

TNA’s costs

I don’t understand how TNA is able to afford their roster. It seems their ppv, house show and merchandise business is not all they might wish it to be. I understand the television contracts are their prime source of revenue, but if recent (I imagine) big money additions (Angle Foley, Hardy, Hogan, etc..) did not significantly move their ratings, how can they justify the added expense? At what point, do they start running a deficit based solely on the cost of talent?
– Ronnie

If the roster was still owned by the Jarretts, then you would probably have something there. However, the Carter family has a lot… A LOT of money. I think Dixie treats TNA as sort of a hobby. Throw money at a lot of older legends and see how much you can make. If she makes a profit, however small, I think she’s satisfied and that simply cannot do. Perhaps I’m missing something, but that’s just my guess.
– Doc

Much of the roster is paid more for appearance. This is one reason some don’t judge Russo too harshly – because he tried to book something for everybody, everybody got paid. There may be a retainer, but the wrestlers get paid more for actually being at a show or on TV.

When wrestlers aren’t scheduled for TV tapings, TNA doesn’t have to cover their travel and hotel stay either.

If I remember the stuff at the time, the signing of Hogan involved TNA and Spike, so Spike may be footing part of the bill. If they are though, I don’t think they are using him effectively.
– Guest#7589

Yes, TNA’s roster is expansive but they do not have the downside guarantees that the WWE boasts. Some have it, but most make a per appearance deal, including Kevin Nash who makes about $5,000 per visit. That said, there is the cost of getting people around the country and putting them up, and TNA will pay for plenty of people to come to iMPACT whether they are used on television or not.

The Carter family is not involved in the daily operations of TNA. The way they bought into the company was a debt buyout in which TNA had to pay Panda Energy back for every dollar invested. Jeff Jarrett recently mentioned that almost all of that debt was paid back, so that means the Carter family is taking money out of TNA, not putting it in.

A number of the people Ronnie listed (Foley, Angle, Sting, etc…) have been in TNA for a long time. Spike has helped cover their costs in the past if they felt a wrestlers would help sell advertisers. Do not forget that Spike pays TNA a programming fee and that the only way they make money is by selling advertising space. Ratings are one of the factors that determine advertising rates, but so are big names. If Spike can say they have a show with Hulk Hogan on them, more advertisers will be interested in the program and Spike can sell either more ads or the same number at a better rate.

iMPACT around the world

Impact may well be airing in an impressive number of countries, but I wonder how well it is doing in them.

I understand the UK ratings have hit record levels in recent months, but they’ve tumbled in Australia – first-run Impact has been moved several times to worse timeslots, and is now at 11:30pm on Saturdays.

Not that it makes any immediate difference to TNA, but it may when it comes time to renegotiate the deal (not to mention even further harming the prospects of a successful Australian tour).
– Donners

India has been quite good for TNA, as well, and their rating were impressive enough in Israel to at one time consider doing a house show. Mexico is a decent market, but they are not demolishing the local competition like the WWE is. Dixie Carter and Jeff Jarrett have claimed they are beating the WWE is many countries, and that could be quite true in places like Qatar.

That said, as a guest on here has frequently commented a person in the UK or the USA is going to be worth more than a person in Qatar because of perceived purchasing power. Getting an 8.8 rating in Mexico may be wonderful, but advertisers will still only pay up to a certain amount because people in Mexico have less disposable income than their counterparts in the USA. So if an advertisers is willing to pay $10,000 for a 30 second spot with a 1.0 rating in the USA but would want a 7.0 rating to do pay that in Mexico, NXT in the USA could conceivably bring in more money in the USA than SmackDown in Mexico.

TNA’s Buyrate

I have never seen that 7000 number quoted by someone more credible than my own ass. It is far more responsible to report known good numbers than rumors.
– Guest#5005

Is this a shot at Meltzer and the Wrestling Observer? I’m not a subscriber, so I don’t have their archives, but internet forums have him reporting sub-10,000 buyrates for TNA in May and June 2010, and reporting 150-00-36000 buys in 2007.

Is Meltzer being misquoted, are you saying he doesn’t have the facts, or what?
– John Bragg

Does no one recognize a dig at Jeff Small anymore?

Wasn’t it widely reported that the PPVs featuring the Samoa Joe/Kurt Angle feud a few years were drawing about 60,000 buys?
– Guest#4829

That would be LockDown 2008 from Lowell, MA where the show pulled in about 50,000 buys. Additionally, this PPV boasted TNA’s largest domestic audience at 8,000. This reporter was there live with Jeff Small thanks to the company whose assets were known as Midway Games. You can see both of us on camera here.

Development System

What television deals does FCW have in place? Do they run on local channels? Is FCW financially self-sufficient? If so, why wouldn’t WWE try to create similar promotions in other former territorial hotbeds (Charlotte, Memphis, Philly, Portland)? The reason I suggest different regions is because of the different styles practiced..at least back in the day. Why not give Arn Anderson the seed money to run the old Crockett circuit with the purpose of developing talent and breaking even? And I don’t mean just throwing two green guys in an angle, but hiring old vets to teach them how to work in front of a crowd. Why is that a bad/unworkable idea?
– Ronnie

Wikipedia tells me FCW airs on the “Bright House Sports Network” which I will assume is on local cable.

I have had a similar idea to yours. Set up self supporting developmental territories, support them with some marketing, and help them get a television deal.

This also solves the problem of having a fairly crowded roster. The younger wrestlers can clearly use the seasoning that wrestles use to get working the territories. They would be much more well rounded and will have (hopefully) worked out their issues with traveling. As well, working various styles made for some flexible performers, witness HBK vs JJ.
I think working with Dusty, Arn Anderson, and HBK at various times can only help young developing wrestlers with both wrestling and the mic. Jericho and Regal would be great too, when they leave the main roster.

Really, when you look at WWE’s road agents, you see a bunch of guys who would be excellent trainers.

However, don’t hold out hopes for a Crocket developmental territory and the teaching of the Southern Style. Vince McMahon has exhibited some distaste for anything that sounds too southern.
– Guest#7589

WWE uses FCW as a training school almost. FCW relies on WWE for financial support, unlike OVW, I don’t think they’re self sufficient. The Journal could probably give you a positive answer there… The reason is because they simply don’t have the capital to create a faux territory system, plus run overheads in their own company. It would just be prohibitively expensive
– Doc

Deep South Wrestling obviously was reliant on the WWE as the company shut down almost immediately after the WWE pulled support. OVW survived and is profitable right now, so they did not have that same level of dependence. They also had about five months to prepare for the disengagement while DSW was taken in the middle of a day with no notice (which is why Jody Hamilton is suing the WWE), so the factors are quite different.

The WWE had DSW and OVW at the same time and then shut down DSW to concentrate everything in OVW. They wanted to limit the logistics and costs, so going to one place allowed them to do that. But Florida is a lot cheaper from many levels and the weather is fairer, making it more ideal for the WWE. The other part is a large number of wrestlers live in Florida because there is no income tax so the WWE could use more of the people they have down there at the school on a regular basis.

While a more diverse system would lead to wrestlers with greater depths of understanding, from a logistics and costs perspective the WWE does not have a benefit.

Plugs

If you have not done so yet, please check out JP Prag’s Pro-Wrestling Pilot: Fast Forward. If you have ever wondered if you can save time by fast forwarding to the good parts, this article is for you!

Plenty more was written, so be sure to take a look. And if you enjoy the Journal, why not bookmark 411wrestling.com and make it your home page? You can do that by clicking here.

This concludes Issue #155 (Volume 2) of THE HAMILTON AVE JOURNAL. Join us next week as we get ready to ring the bell again.

Till then!